Software Developers: Are you selling logic or infrastructure?
If we have a look at software in the “age of the cloud”, where software-as-a-service is delivered from a server to our browsers, software developers have to take care of both logic (features and user experience) and infrastructure (storage, bandwidth and computation) - or decide to sell only logic.
Traditional desktop software developers are in the business of selling logic. You buy their software on a CD or as a digital download, pay once and run it on your computer. Mobile software developers can also sell their apps for a one time fee in app stores and let Apple and Google handle the distribution. For software running on servers (or mobile/desktop software with a heavy server backend), though, developers have to make the decision.
Providing infrastructure seems to be a tough task, since developers have to take care of things like availability, reliability and scalability in addition to their logic. Independent developers often shy away from this. Shaun Inman, creator of the RSS reader Fever (which I’m using for more than a year and blogged about here), sells his software for a one-time fee and asks customers to provide their own webspace with PHP and MySQL. That’s certainly easier for him and I’d think most of his customers prefer this, however it’s a bit technical and also I think he would earn more when selling a hosted version with a monthly subscription.
Selling infrastructure can be much more lucrative compared to selling logic, because developers can charge recurring fees instead of a one-time price and the customer’s willingness to pay is often higher, because a) the monthly charge looks less, b) the customer saves time (for setup) and own infrastructure charges and c) there is no direct competition with free/open source software.
I don’t want to argue for only one model or the other, since there are many constraints and effects to consider, e.g. “prosumers” prefer providing own infrastructure for a sense of control. (Also, I love choice.)
In his article “Clouds for People, or the Consumerization of the Cloud”, blogger Anil Dash suggested that there should be app stores for hosted services similar to those on mobile devices, where consumers can purchase a bundle of logic and infrastructure and set it up easily with a few clicks: "There’s no reason the experience can’t be as seamless and easy to buy an EC2-hosted web app on a Kindle Fire as it is to buy Words with Friends or the Foursquare app."
I think this can model can bring both sides to the table, consumers wanting to have a simple experience and developers not wanting to care about infrastructure but still benefitting from a monthly revenue share. So I’m sure we will see more of that soon. What do you think?!